Panama Canal Expansion Suspended Over Cost-Overrun Dispute

The stalled expansion project of the Panama Canal in Panama City on Thursday.

Mauricio Valenzuela
/ Xinhua/Landov

Originally published on February 8, 2014 11:44 am

A Spanish-led consortium charged with a multibillion-dollar expansion of the Panama Canal lock system has halted work after a disagreement over massive cost overruns in the project.

The BBC says the consortium, known as Grupo Unido por el Canal (GUPC), announced that work had been stopped because it's owed $1.6 billion for a project to build a third set of locks designed to handle bigger ships than can currently fit through the canal. The original price tag was set at $3.2 billion.

"While awaiting an agreement to enable the finalisation of construction, work has been suspended on the project," the consortium said in a statement.

The BBC says:

"The GUPC says the Canal Authority has also failed to pay an outstanding $50m bill, which would allow the companies to carry on the work in the short term.

"But the consortium said it would 'continue the efforts to find a joint solution and reach an agreement with the ACP.' "

Reuters says GUPC and the Canal Authority have made new proposals aimed at reviving the project:

"Grupo Unidos Por El Canal (GUPC), led by Spanish builder Sacyr, said it was pushing for a settlement with the Panama Canal Authority (PCA) to resume the work, which would double the capacity of the century-old waterway.

"It declined to comment on the details of the proposal it sent on Thursday to the [Panama Canal Authority].

"The Canal Authority said it had sent the consortium a counterproposal based 'on the parties contributing financial resources to resume work as soon as possible.' "